Balanced basics for economic development

Posted
Tuesday, February 2, 2016 2:40 pm

Rep. Cynthia Browning

Economic Development is a perennial topic in policy discussions and political campaigns. There is substantial agreement that state policies should create conditions that support growing business activity and job creation. There is substantial agreement that Vermont faces some difficulties including deficiencies in workforce training and insufficient telecommunications infrastructure. There is also the contrast between fast growth and low unemployment in Chittenden County and slow growth and high unemployment in other parts of the state.

Almost every year the Legislature passes an "Economic Development" bill. And yet we still struggle with these problems. I think that this is because some of the actual policies put in place are unbalanced and ineffective. I believe that instead we should concentrate on policies that improve conditions for all Vermont businesses rather than just a few, and we should target infrastructure investments on the regions that are lagging.

(1) Clean Water for All Vermont Towns.

We should make a stronger push to upgrade the aging infrastructure of drinking water and pollution control facilities of Vermont towns. We know that without clean drinking water no economic development is possible (just ask people from Flint or Hoosick Falls). We know that without better pollution control in municipal sewage facilities it will be hard to clean up our lakes and rivers – and who wants to live by a polluted waterway? These projects create short term jobs and long term productive public assets and they are the most basic requirements for economic development. We may need to increase the funding for these programs and we need to be sure that this money is not siphoned off to support private projects. (These town water projects are investments funded with already authorized bonding in the Capital Bill, so allocating more to them would not make it harder to balance the state budget.)

(2) High Speed Telecommunications for all Vermont Towns.

We need to extend better communications infrastructure to small towns and rural areas underserved areas to support economic activity. We have made a lot of progress improving coverage, but without faster high speed internet service Vermonters in these regions will not be able to run businesses from their homes or be able to telecommute. Vermont students at the schools in these areas will not be able to take advantage of distance learning programs or to do their homework at home. I would target an additional $1 million towards improving service to small town schools and the communities around them. (This money would also be from within the already authorized bonded dollars of the Capital Bill.)

(3) Lower Taxes for All Instead of Special Support for Some.

Through past efforts to support businesses we have created a tax code with so many special tax breaks for particular industries that overall tax rates have to be higher to make up for the lost revenue. It is a kind of vicious cycle in which a particular industry asks for a tax break and gets it, which then means that others pay higher tax rates, so they ask for tax breaks, and so forth. Our tax policies should be aimed at low and stable tax rates for all, not special treatment for some. Comprehensive tax reform is long overdue.

There are some programs that provide tax reductions for companies that create a certain number of jobs. There are programs that provide subsidies to companies who provide training for workers. The problem with this approach is that no matter how the policy is designed, there is always the question of whether the company would have done the training or created the jobs even WITHOUT the state support. The same companies tend to get these credits and subsidies repeatedly, and the programs cost millions of dollars every year, at a time when almost every year the state struggles to balance the budget.

The absurdity of this kind of approach was recently taken to an extreme when Governor Shumlin and several legislative leaders allocated $1 million in your tax dollars to Global Foundries: a large, profitable, foreign owned corporation that is already here and already investing in the Vermont facility.

In a way it is the unbalanced policies themselves that make the subsidies seem to be needed. If we were doing the basics really well we would not have to give taxpayer dollars to corporations to get them to come to Vermont, to stay in Vermont, or to create jobs. It would make more sense to use the millions of dollars given to corporations every year under such provisions to lower property tax rates for ALL Vermont businesses and to develop better training programs at our technical centers that are accessible for ALL Vermont students.

There should be less of a fixation on particular companies and more focus on investing in the basic conditions that can support all companies of all sizes and all workers in all parts of the state. Comprehensive tax reform could ensure that there are lower rates for all rather than special privileges for a few. We need to return to basics for economic development policies that will work.

Rep. Cynthia Browning represents Manchester, Arlington, Sunderland and Sandgate in the state legislature.

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